Is the Fourth Time a Charm?
The IRS is now offering a fourth settlement initiative for eligible taxpayers involved in syndicated conservation easement disputes. This offer, published by the IRS in IR-2025-65 on May 13, 2026, follows the IRS’s updated scorecard on “Conservation Easements” touting the IRS’s victories and comments at the January 8, 2026 Tax Conference of the D.C. Bar by Acting IRS Chief Counsel Kenneth Kies, who is also Assistant Treasury Secretary for Tax Policy. The message to taxpayers in the updated scorecard is that taxpayers will not win these cases in court. To incentivize participation in this settlement opportunity, the IRS is not requiring immediate payment of the settled amount (tax, penalties, and interest). This fourth settlement is by invitation only, similar to the prior settlement initiatives. This offer will give taxpayers who rejected prior settlement offers another opportunity to settle their cases.
It has been nearly six years since the first conservation easement settlement offer. Whether the delayed payment offered in the current initiative is enough of an incentive to bring the masses to resolve their open cases remains to be seen.
The chart below shows the terms for each of the four IRS conservation easement settlement programs.
| IRS Offer | First | Second | Third | Fourth |
| Date | June 25, 2020 | 2024 | 2024 | May 13, 2026 |
| Charitable deduction allowed? | No | No | No | No |
| Partnership-level settlement? | Generally† | Yes | Yes | Yes |
| Immediate payment of full tax, penalties, and interest? | Yes | Yes | Yes | Yes and No |
| “Other” deduction for costs? | Investors: yes Promoters: no |
Yes; no distinction among partners | Yes; no distinction among partners | Yes; no distinction among partners |
| Tax Rate | No change | No change | 21% | No change |
| Penalty | Investors: 10%-20% Promoters: 40% |
10% | 5% | 10%†† |
| Source | IR-2020-130 IR-2020-228 CC-2021-001 |
Letters to partnerships (invitation only) |
IR-2024-174 Offer |
IR-2026-65 |
| Eligibility | Docketed (Tax Court) |
Docketed (Tax Court) |
Nondocketed (Exam) |
Docketed (Tax Court) and nondocketed (Exam) |
† The IRS stated it might consider offers to resolve cases on similar terms where less than all partners agree, but might revise certain terms (e.g., making the penalty 15% to 25%). CC-2021-001 at B.2 & B.3.
†† After the 90-day offer period, for 45 days, eligible partnerships may settle for a 20% penalty. After the 45-day period (135 days total), cases will be resolved prior to a court decision only based on litigation hazards.
Written by Kim Tyson.